A new report from NPD DisplaySearch finds a sequential quarterly decline in flat panel LCD displays that are commonly used in public display applications, but the popularity of the same panels among consumers means the falloff in shipments isn't necessarily bad news for digital signage.

Global shipments of flat panel LCD displays used for digital signage and other public display applications declined in the fourth quarter of 2011, marking the first sequential quarterly decline in three years, according to recently released data from NPD DisplaySearch, a global research and consulting firm specializing in the display supply chain.

The decline comes after a two-year period of impressive growth for the public display (also called the "large flat panel display") category. Between 2009 and 2011, this market segment witnessed 65 percent growth in unit volume production, the display market research and analysis firm said.

The data, part of the "NPD DisplaySearch Quarterly FPD Public Display Shipment and Forecast Report," show LCD display shipments were pulled down by a dropped in the 26-inch to 37-inch category.

The decline raises an obvious question: "Is the public display market in general, and digital signage market in particular, sliding back into recession?" The answer, however, is far less clear.

As NPD DisplaySearch acknowledges, the sequential drop came in what it describes as "the least well-defined" slice of the market, namely the 26-inch to 37-inch space. Why is this the least well defined category? Simply stated, this segment is popular with the flat-screen TV buying public as well as with integrators who often install consumer TVs for digital signage applications. Many panels used for public display fall in the 32-inch category. Thus, without a clear delineation between the 32-inch displays used for digital signage and those used to watch television in the home, it's not possible to unequivocally attribute the sequential quarterly decline to digital signage and public display.

As Chris Connery, DisplaySearch VP of PC and Large Format Commercial Displays put it in a press release announcing the report, "The challenge comes when trying to fully quantify these markets since many times commercial installers use consumer-grade TVs for quick hang-and-bang solutions."

So, if it is not possible to tell from the data whether the sequential decline indicates a rocky road ahead for public display and digital signage, what information of value can be taken away from the latest NPD DisplaySearch findings for those with an interest in the digital signage market?

I would suggest the findings draw attention to the importance of affordable, flat-panel LCD TVs to the growth digital signage. To be sure, certain digital signage applications require higher-end, professional features, such as high brightness backlights, smaller bezels, and even touch-screen capability for hybrid, interactive digital signage. But a large number of applications don't.

Relatively inexpensive consumer flat-panel HDTV sets using LCD screens are more than adequate for many uses -particularly when compared to the heavy, boxy, low-resolution CRT-based displays they are replacing.

Rather than look at the sequential quarterly decline with fear about the road ahead, it may be more prudent to look at it with a bit of caution and also a recognition that the decline may be more attributable to a falloff on the consumer side of the equation.

It may also make sense to understand that there might be a silver lining for the digital signage market. After all, if the decline is occurring because consumers are buying fewer units, vendors will have an incentive to lower display prices, which will make it more affordable for businesses, retailers, corporations and other entities to consider adding digital signage to their communications strategies.

Smartphones and tablets present digital signage with new opportunities to evolve.

The broad adoption by consumers of media tablets and smartphones, such as the Apple iPad and iPhone, is certain to impact digital signage in ways that today aren't fully imaginable.

However, there are a few important data points about these devices that offer a clue as to what some of the effects will be and their potential magnitude.

First, the number of media tablets and smartphones in use is staggering. In the two years since they have become available, 55 million iPads have reached consumers' hands. IHS iSuppli forecasts 275 million tablets worldwide (all tablets, not just iPads) will be sold by 2015. At home in America, 65 percent of the population, some 200 million, will have smartphones and/or tablets by 2015, an In-Stat study says.

Those numbers mean that whatever the ultimate impact will be of these devices on digital signage, it's bound to be huge.

Second, these devices are changing how people like to interact with technology. Multi-touch screens, a critical component of the success of tablets and smartphones, will likely become an important component of some digital signage applications, too. After all, people by the millions are being trained by their devices on how to interact with screens.

Soon the desire to have multi-touch will shift from a want to an expectation in the minds of consumers who access information via a screen. This naturally will carry over to digital signage, particularly hybrid digital signage used in interactive kiosk applications.

It's worth noting that the popularity of multi-touch is nearly overwhelming -literally. In late March, IHS iSuppli reported that the "runaway success" of the iPad and iPhone has created a boom in the shipment of touch screen display. That in turn will cause the market for the silicon that makes multi-touch possible to nearly triple in size over the next five years -from 865 million touch screen controller integrated circuits in 2010 to 2.4 billion in 2015.

Smartphones and tablets also will likely affect digital signage by giving this emerging communications medium a way to reach out to consumers in the proximity of a digital sign and wirelessly deliver information, coupons and QR codes. With so many smartphones and tablets in the hands of consumers, doing so seems like a natural way for marketers and other communicators to extend the digital signage experience beyond the public square and into the purses and pockets of the general public.

To be sure, my crystal ball is as clear as the next fellow's. But it seems to me you don't need to be Nostradamus to look a little bit down the road and see that smartphones and tablets will play an increasingly important role in the direction of digital signage.

While predicting exactly how these new devices will shape future digital signage developments is impossible to say, it is certain that digital signage vendors and the people who communicate with these signs will be hard at work seeking to find ways to benefit from the swelling ranks of their users.